Normally, BitcoinWarrior tries to say away from discussing altcoins and especially ICOs. We were recently contacted by Nick Ward of the IOTA team and asked to write something up about them. IOTA raised 3,000 bitcoins in a crowdsale last June, and their market share has been rising to the point where they are now ranked fifth in market cap according to CoinCap.io. I decided that writing something up would be worthwhile, but lacking any expertise, I just asked some of the questions I thought anyone might have about the nascent machine-top-machine payment protocol.
Here are my questions and the IOTA team’s responses. Enjoy the read!
Do you see IOTA as a competitor to, complement with, or something else to Bitcoin?
In IOTA we tend to not view other ledgers as competitors, only a parochial mindset would breed maximalism, rather I’d say that they have their own domain expertise. I have always seen Bitcoin’s role as a digital equivalent of gold, a holding value. If we all just embraced this I think it would be very complementary to IOTA. We are even working together with Rootstock on demonstrating some of this interoperability between the ledgers. For payments however you cannot beat no fees and no scaling limit, which is what IOTA as a transactional settlement layer brings *on ledger*.
Jamie Burke: “IOTA improves upon the original conception of the blockchain in a couple of important ways. Firstly, it removes the fees as there is no need for miners. Secondly, it scales in a way that means there will never be a blocksize debate with IOTA. These two qualities open up a whole host of use cases for which today’s public blockchains simply aren’t well suited.”
If I read the materials right, all IOTA coins have been premined. Who holds them and what is the method that they will be distributed to create a functional economy?
I dislike the term premine, it has negative connotations stretching back many years. What we did was crowdfund the IOTA project and distribute the tokens fairly among each contributor, we did not premine or pre-allocate any iotas for ourselves, each founder and developer had to purchase on the same terms as everyone else. This initial distribution took place early 2016 and since then has shifted hands countless times to which it is now evenly distributed amongst 10s of thousands of people.
Jamie Burke, CEO Outlier Ventures: “Outlier Ventures was an early strategic investor in IOTA and we will continue to hold a significant number of tokens because we believe this initiative represents a genuine leap in blockchain that has real and immediate applications to our network of corporate partners. Cisco is just one example but expect a constant stream of similar announcements over the coming months.”
In the best-case scenario, how do you see IOTA developing, and what impact do you think it will have on finance and beyond?
I believe that IOTA is suited to deliver on a lot of the promises blockchain came with, but couldn’t deliver due to a fundamental architectural limit. IOTA is the first time in history that you can transact exact quantities of funds without any trusted party needed, this opens up a complete new realm for financial technology, but also economics itself. Suddenly you can pay for exact consumption in real time, rather than upfront or after the fact, no more paying in intervals. Due to there being zero fees you can conduct 0.00001 cent transactions, so this give rise to things like Pay Per Byte of bandwidth, storage or streaming, Pay Per Analytics cycle in computation, Pay Per Watt of charging, Pay Per API request etc. etc.
Going beyond finance IOTA is also the perfect trust anchoring layer for data. The distributed ledger ensures data integrity just like it provides immutable transactions, but until IOTA it was impossible to utilize this theoretical benefit to any large extent due to the fees and scaling limit, with IOTA you can indeed ensure data integrity in a real time fine granular fashion, so we can finally trust data to not have been tampered with, this is a game changer, once you can trust that the data is honest you can start to automatize all sorts of processes on top of it, in the era of IoT and Big Data this is naturally extremely valuable.